What is this?

WATCH: US Secretary of State John Kerry says this action is a call to action for all countries to change their ways.

WASHINGTON – Failure to meet minimum standards in fighting human trafficking has landed Thailand and Malaysia on a State Department blacklist, a move that could strain relations with two important U.S. partners in Asia.

Related

Secretary of State John Kerry launched the annual U.S. assessment of how 188 governments around the world have performed in fighting the flesh trade and other forms of exploitative labour.

Thailand had mounted a determined campaign to prevent a downgrade that could exact a reputational cost on its lucrative seafood and shrimp industries for which America is a key market.

Thai ambassador to the U.S., Vijavat Isarabhakdi expressed disappointment with his country’s downgrade, saying the report did not recognize “our vigorous, government-wide efforts that yielded unprecedented progress and concrete results.” But he said Thailand would continue to collaborate closely with the U.S. on combating human trafficking and in other areas.

The Trafficking in Persons Report is one of several annual assessments issued by the department on human rights-related topics, but it’s unusual in that it ranks nations, which can ruffle diplomatic feathers. It is based on the actions governments take, rather than the scale of the problem in their country. Globally, more than 20 million people are believed affected.

“There cannot be impunity for those who traffic in human beings. It must end,” Kerry said, describing it as slavery in the 21st century and an illicit business generating annual profits of $150 billion.

Thailand and Malaysia are among 23 countries to receive the lowest ranking, “tier 3.” Incumbents at that level include Iran, North Korea, Russia, Saudi Arabia, Syria and Zimbabwe.

Two other nations were also demoted to that level: Venezuela and Gambia. China, put on tier 3 last year, was elevated to a watch list.

President Barack Obama now has 90 days to determine whether to apply sanctions against tier 3 governments.

The president can block various types of aid, such as arms financing, grants for cultural and educational exchange programs and could withdraw U.S. support for loans from the World Bank and International Monetary Fund. But the U.S. often chooses not to, based on its national security interests, as it did last year for China, Russia and Uzbekistan.

Given the Obama administration’s attempt to deepen its ties with Asia, human rights groups had been watching closely to see if Washington might shy from downgrading Thailand and Malaysia, which attract millions of migrant labourers from poorer neighbouring countries in Southeast Asia. So it may resist applying sanctions against them.

Just two months ago, Obama became the first U.S. president to visit Malaysia since 1966, while Thailand is the oldest U.S. ally in Asia. Thailand is already being hit with restrictions on American assistance in response to a military coup there last month.

Luis CdeBaca, U.S. ambassador-at-large for human trafficking issues, said U.S. was mindful of the diplomatic sensitivities but ultimately was guided by the facts on the ground and wouldn’t flinch from “telling a close friend an uncomfortable truth.”

Both nations had faced automatic demotion unless they showed improvement during the annual reporting period that ended March 31. Other countries in a similar position — Afghanistan, Barbados, Chad and the Maldives — were promoted to tier 2.

Among other nations that earned an upgrade were Sudan, which was lifted from tier 3 after adopting anti-trafficking legislation, and Chile which is now among 31 governments, including the United States, to receive a tier 1 rating. That means they fully comply with the minimum standards in combating human trafficking as defined by a U.S. law.

Thailand maintained it had stepped up its anti-trafficking efforts in the past year. The government reported 674 investigations in 2013, more than double the number in 2012, and that it punished or investigated at least 38 Thai police.

But CdeBaca said official complicity in human trafficking remained widespread. He said there had been few efforts by Thailand to stop debt bondage and forced labour — including in its commercial fishing, shrimp and seafood processing industries.

The report paints a grim picture: Some migrants remain at sea for several years, working 18 to 20 hours per day for seven days a week, facing threats and beatings. It notes Thai civilian and military officials reportedly profited from the smuggling of minority Muslims from Myanmar and Bangladesh, and their sale into forced labour on fishing vessels.

The U.S. contended that anti-trafficking law enforcement efforts in Malaysia have decreased, with less investigations and convictions in 2013 than in 2012. Migrant workers on palm oil plantations, construction sites, textile factories and in homes as domestic workers face wage fraud and restrictions on their movement, the report said.

The precarious situation of migrant labourers has been underscored in recent days. Fears of a Thai crackdown on migrants prompted an estimated 200,000 Cambodians to flee to the border. In Malaysia, two overcrowded boats carrying Indonesian workers have capsized this week, leaving dozens dead or missing.

Qatar, where more than 90 per cent of the workers are foreign migrants, was demoted to watch list status. That comes as the small Gulf Arab nation ramps up construction to host the 2022 soccer World Cup. The U.S. report drew attention to recruitment practices and the widespread practice of withholding workers’ passports.

Melysa Sperber, director of the Alliance to End Slavery and Trafficking, voiced serious concerns about the United States’ own efforts, notwithstanding its tier 1 status. She said government assistance for trafficking victims was inadequate and was suspended for about a month last year because funds ran out amid budget disputes in Congress.

“That’s simply unacceptable when we are marching around the world judging other countries,” she said.

CdeBaca said the suspended assistance was eventually provided. He said although the U.S. needs to do more, it has dramatically increased anti-trafficking prosecutions in recent years and also provides long-term immigration opportunities for victims, which can include American citizenship.